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Kazaa Copyright Trial Begins in Australia

November 29th, 2004

The long running saga of the music industry’s copyright battle against the worlds most popular peer to peer file sharing software Kazaa moved to Australia today as case number NSD 110, Universal Music Australia Pty Ltd v Sharman License Holdings Ltd got underway in the Federal Court of Australia in Sydney.

At the start of a trial over the legality of Kazaa software, the court was told today that Kazaa had 100 million users worldwide, sharing three billion music files a month. Five major Australian record companies-Universal, EMI, Sony BMG, Warner Music, Festival/Mushroom and 25 other North American, European and Australian record companies -are suing Sharman Networks, which develops and distributes the software, for copyright infringement.

The labels contend that Sharman was fully aware of how the software was used and did nothing to stop copyright infringements. Lawyers for Australia’s recording industry branded the popular Kazaa file-swapping network “an engine of copyright piracy to a degree of magnitude never before seen”. Kazaa’s owners, Sharman insist that while they urge users not to commit music piracy, they have no control over what people do with the popular “peer-to-peer” software they provide.

Tony Bannon, representing Australia’s major record labels dismissed Sharman’s defense, saying Kazaa’s owners actively take steps allowing users to filter certain files from the network such as those that could contain viruses or pornography but not the files containing copyrighted songs. Bannon said the owners of the P2P software were seeking to get rich from advertising revenue based on the volume of traffic on the Kazaa network, while painting themselves as crusaders for music fans. Mr Bannon said Sharman’s actions were “all a charade” because it was interested only in making money from the copyright-infringing behavior of its users.

Each file traded on Kazaa has a unique digital fingerprint in the form of an MD5 hash a mathematical signature produced by running an algorithm across the contents of a file. This signature allows Kazaa to identify how many users are sharing the same file so that it can be downloaded from many places at once with complete integrity. If Kazaa were really trying to become a legitimate service, an obvious first step would be to block the MD5 hashes for known pirated files, argues the music industry. The reliability of P2P filtering technologies are still conclusively unproven however and are still under constant development.

Kazaa already has one major court victory under its belt, with the Dutch Supreme Court ruling in December 2003 that Kazaa’s then Swedish owners could not be held liable for copyright infringement. A possible difference in the Australian case is the recording industry’s invocation of the controversial, Anton Pillar Law that allows litigants in civil copyright cases to gather evidence. An Anton Piller order is granted when a judge is persuaded that there are reasonable grounds evidence may be destroyed if advance notice is given.

In February, after a six-month inquiry by the Music Industry Piracy Investigation unit of the Australian Record Industry Association, the record labels, organized under a cloak of absolute secrecy secured the Anton Piller order permitting a surprise search of Kazaa premises, to avoid any potential loss or destruction of evidence and legal authority to gather evidence without police being present. The information gathered has yet to be revealed.

The true owners of Sharman remain a mystery. Although it has offices in Australia, Sharman was formed in the island state of Vanuatu, a no-tax haven where the secrecy of private companies is sacred, improper disclosure of financial information to others is subject to criminal prosecution and tax information is not shared with any outside jurisdiction.

The Federal Court case, before judge Murray Wilcox, is expected to stretch over three weeks.